Practice Questions
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What is the marginal revenue product of labor if hiring one additional worker increases total revenue from $1000 to $1200?
The marginal revenue product of labor is the extra money made from hiring one more worker. Other options are incorrect because This answer might come ...
What happens to the marginal revenue product (MRP) of labor when the marginal product (MP) of labor increases, assuming the price of the output remains constant?
When the marginal product of labor goes up, it means each worker is making more goods. Other options are incorrect because Some might think that MRP g...
In the context of Marginal Revenue Product Analysis, how does the principle of diminishing returns affect a firm's decision to hire additional workers for profit maximization?
Diminishing returns mean that after a certain point, each new worker adds less to total output. Other options are incorrect because This idea is wrong...
In a perfectly competitive market, how does the Marginal Revenue Product (MRP) of labor compare to the wage paid if the firm is maximizing profit?
When a firm is maximizing profit, the MRP of labor is equal to the wage. Other options are incorrect because Some might think that MRP is greater than...
In a competitive labor market, how does the marginal revenue product (MRP) of labor relate to technological advancements and overall productivity in determining the optimal hiring decisions for firms?
When technology improves, workers can produce more. Other options are incorrect because Some might think that better technology makes hiring less impo...
What is the marginal revenue product of labor if hiring one additional worker increases total revenue from $1000 to $1200?
The marginal revenue product of labor is the extra money made from hiring one more worker. Other options are incorrect because This answer suggests th...
What does the Marginal Revenue Product (MRP) of labor represent in economics?
The MRP of labor shows how much extra money a company makes by hiring one more worker. Other options are incorrect because This option confuses cost w...
What does the Marginal Revenue Product (MRP) of labor represent in economics?
The MRP of labor shows how much extra money a business makes by hiring one more worker. Other options are incorrect because This option confuses total...
If a firm finds that the marginal revenue product of labor exceeds the wage it pays, what should the firm do?
When the extra money made from hiring a worker is more than what you pay them, it's smart to hire more. Other options are incorrect because Some might...
If a firm discovers a new technology that increases the productivity of its workers, what is the likely effect on its labor demand?
When workers are more productive, they can produce more goods. Other options are incorrect because Some might think that lowering wages is the only wa...
If a firm experiences an increase in marginal revenue product due to improved technology, what is the most likely underlying cause for this change in labor demand?
With better technology, workers can make more products in the same time. Other options are incorrect because A lower wage might seem good, but it does...
A small bakery is considering hiring an additional baker to increase production. They find that the new baker can produce enough bread to generate an additional $500 in revenue per week. However, the cost of hiring this baker, including wages and benefits, totals $400 per week. Based on marginal revenue product analysis, what should the bakery do?
The bakery should hire the baker because they will make more money than they spend. Other options are incorrect because Some might think the cost is t...
Which of the following statements accurately describe the implications of marginal revenue product (MRP) analysis in labor demand decisions? Select all that apply.
None of the statements accurately describe how firms decide to hire workers based on MRP. Other options are incorrect because This suggests firms will...
A firm is considering hiring an additional worker. Given that the marginal revenue product (MRP) of the worker is $30 and the marginal factor cost (MFC) is $25, which of the following best explains the firm's decision regarding employment?
The firm should hire the worker. Other options are incorrect because This option suggests that the worker costs more than they earn; Hiring a worker d...
In the context of labor demand, a firm will continue to hire additional workers until the marginal revenue product (MRP) equals the __________.
A firm hires workers until the extra money made from one more worker equals what it costs to hire them. Other options are incorrect because Total reve...
If the relationship between Marginal Revenue Product (MRP) and Marginal Factor Cost (MFC) is akin to the relationship between supply and demand in a market, what would be the correct analogy for labor productivity increases due to technology?
When MRP goes up, it means each worker is making more money for the company. Other options are incorrect because Some might think that lower costs alw...
Arrange the following steps in the correct order regarding the impact of increased labor productivity on a firm's hiring decisions: A) The firm evaluates the new marginal revenue product resulting from increased productivity. B) The firm compares the new marginal revenue product with the marginal factor cost. C) The firm decides whether to hire more workers based on the comparison. D) The firm implements the new technology that enhances labor productivity.
First, the firm uses new technology to boost productivity. Other options are incorrect because This option suggests comparing before evaluating the ne...
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